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• The mallee biomass industry has opportunity to implement new optimised supply chain
arrangements rather than optimising existing structures as was required in the sugar industry.
• Harvest scheduling may not be as critical for mallee biomass since harvest to process delays will
not compromise quality as much as in sugar and short term stockpiling is possible, however
further research on storage losses is required.
• Harvesting and transport costs are likely to be at the growers’ expense, either directly when a
contractor is engaged by the farmers, or indirectly when the biomass value is determined by the
biomass processor, who engages the harvest and transport contractor, and pays the farmers an
amount for the standing mallee.
• Mallee biomass processor companies are unlikely to be as engaged with crop production,
harvesting and transport matters as sugar millers are in cane.
• Multiple product streams from mallee biomass will introduce complexity into supply chain
management requirements.
Biomass processing, supply chain planning and economic and market consideration
• Sugar mills have developed sophisticated sugar extraction processing capability over many years.
New by-products and processing requirements are in many cases complementary to sugar
extraction technologies.
• The development of a viable industry based on mallee biomass cannot happen overnight or on the
back of current products such as the boutique oil industry. A number of local options exist which
can offer very attractive markets for limited production quantities. Such markets include local
thermal for abattoirs and feed milling, and local electricity particularly for use by local industry
where the cost of supply of sufficient capacity from the grid would be prohibitive. As the
industry expands, most significant potential market will probably involve emerging technologies
such as liquid fuels via pyrolysis.
• The sugar value chain is well developed and has committed stakeholders who are fully dependant
on one another. The bioenergy value chain is less developed and has competing supply products.
• The sugar miller has good understanding of the producer’s needs and many sugar millers also
have sugarcane growing operations which are used to manage supply risk particularly early in the
harvest season when sucrose values are low and farmers are generally unwilling to supply cane.
• Energy markets will generally see the biomass supply as a commodity and have no interest in
becoming involved in supply chain planning and management.
• The sugar industry growing sectors have some influence on price paid for cane (through their
representing bodies (Canegrowers)) and in some regions are rewarded through the pricing
mechanism for good quality cane.
• In the mallee industry producers are likely to be price takers in the electrical energy market where
price is determined by substitute products. In thermal energy markets, LPG is the preferred
energy source due to high electrical transmission costs and poor conversion to heat energy.
While these markets are more localised and moderate in size, larger margins in the thermal
market allow mallee suppliers more room for negotiation.
• There is no trading commercial representation of mallee producer interests. A mechanism to
establish a market related price accounting for quality of mallee biomass will be important.
• Better economies of scale are required for the mallee biomass industry through appropriate
business structures such as cooperatives, joint ventures and consortia.
Implications for relevant stakeholders
Important overall implications include:
• The development of a long term viable mallee biomass industry can be driven by actively
targeting small but potentially highly profitable niche markets in the short term, and supporting
these to further develop the technology envisaged for a larger scale industry.
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